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Networks and entrepreneurial learning: Coping with difficulties
Abstract
Purpose - Many scholars analyse networks and learning to understand how individuals
successfully create and manage new ventures. Based on the assumption that entrepreneurs
learn from networks, this study examines which types of difficulties encourage entrepreneurs
to use networks to facilitate learning, whether entrepreneurs change networks to deal with
such difficulties, and which network characteristics facilitate learning.
Design/methodology/approach - Networks are considered a potential source of learning,
namely, the cognitive process of acquiring and structuring knowledge, creating meaning from
experience and generating new solutions from existing knowledge. Through networks,
entrepreneur share information and discuss opportunities and problems. Using an innovative
approach combining storytelling and network mapping, this study analyses how
entrepreneurs use networks in learning. The data collected from six entrepreneurs working in
knowledge-intensive sectors enables examining the learning process ensuing from the
interactions between entrepreneurs and their contacts.
Findings - The findings show that entrepreneurs construct different types of networks in
response to their difficulties, not in relation to products or technologies, but to learn to
overcome self-crises, external threats, management and organisational issues. The findings
reveal that entrepreneurs develop networks dominated by strong ties for exploitative learning
and networks dominated by weak ties for explorative learning.
Originality/value - This study contributes to literature on networks and entrepreneurial
learning. More specifically, the study provides evidence of learning in the context of
networks, which is a relatively overlooked area in entrepreneurship literature, identifying the
role of difficulties in determining the type of learning through networks and the related
mechanisms.
Keywords: Learning, networks, difficulty, entrepreneurship
Paper type: Research paper
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Introduction
Studies that understand how individuals successfully create and manage new ventures
through networks and learning are increasingly popular in entrepreneurship literature (Hoang
and Antoncic, 2003; Politis, 2005; Rae, 2005; Rae and Carswell, 2001; Ravasi and Turati,
2005; Wang and Chugh, 2014). In the process of learning, entrepreneurs involve other people
including family, friends, colleagues and other business contacts. Entrepreneurs often have a
limited ability to explore and exploit opportunities due to their lack of business skills and
experience, entailing the need to learn to effectively penetrate markets, obtain finance and
organise resources (Cardon et al., 2009; Wright et al., 2012). Struggling to overcome these
difficulties may encourage entrepreneurs to find solutions through observing, interacting and
communicating with others (Holcomb et al., 2009; Lave and Wenger, 1991; Rae, 2006;).
Thus, entrepreneurial learning can be seen as a social process (Grippa et al., 2009; Taylor and
Thorpe, 2004; Wenger, 2000) where the ability to learn is dependent on the social context
(Holman et al., 1997; Lave and Wenger, 1991).
While literature argues the importance of networks in entrepreneurship (Hoang and
Antoncic, 2003; Jack et al., 2010; Johannisson, 1995; Ostgaard and Birley, 1994), few studies
focus on the role of networks in entrepreneurial learning (Pittaway and Cope, 2007; Rae,
2005; Romano and Secundo, 2009; Taylor and Thorpe, 2004). Extant studies explain learning
as an individual process and overlook the interaction process whereby entrepreneurs engage
with their networks in relation to learning (Politis, 2015). Although some studies consider
how entrepreneurs use networks for learning (Bergh at al., 2011; Romano and Secundo,
2009; Taylor and Thorpe, 2004), the structure of networks and how different network
characteristics may support their different way of learning is still underdeveloped.
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A further issue lacking in entrepreneurial learning studies is investigating the factors
that determine learning. Literature suggests that much of the learning that takes place in the
context of entrepreneurship is experiential in nature (Cope and Watts, 2000; Deakins and
Freel, 1998; Minniti and Bygrave, 2001; Rae, 2000). Entrepreneurial learning is situated in
the daily activities of creating and managing the business (Cope, 2005). Learning is
frequently unintentional rather than deliberate and occurs when entrepreneurs face difficulties
during their entrepreneurial journey. This leads to learning new skills or questioning their
beliefs to reframe their understanding of the situation or construct new self-beliefs (Holcomb
et al., 2009; Rae, 2006). Learning thus helps entrepreneurs overcome difficulties and
consequently adjust their ambition or strategies (Cope, 2005; Cope and Watts, 2000; Kayes,
2002; Kempster and Cope, 2010; Politis, 2005). Increasing our knowledge of entrepreneurial
learning therefore requires understanding the complex process through which entrepreneurs
learn from their difficulties.
Bringing together two areas of research - networks and entrepreneurial learning - this
study addresses the following questions: 1) Which types of difficulties encourage
entrepreneurs to use networks to facilitate learning? 2) Do entrepreneurs change networks to
cope with difficulties? (3) What network characteristics facilitate learning to cope with
difficulties?
In examining the process of learning through networks, this study moves beyond the
assumption that learning is an individual process, considering the interplay between social
interaction and the entrepreneur’s efforts to deal with crises to overcome difficulties and
barriers to growth. As such, this study forms part of emergent research on learning in the
context of small firms and entrepreneurial networks (e.g., Cope, 2003; Franco and Haase,
2009; Rae and Carswell, 2001; Romano and Secundo, 2009; Sadler-Smith, 2001). A key
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contribution is the development of a theoretical model and a new innovative data collection
method to describe entrepreneurial learning as the process of overcoming difficulties with the
support of networks. This study is also a response to calls for more research on learning as
the transformation of knowledge (Politis, 2005; Wang and Chugh, 2014), examining changes
in networks and the dynamic learning process that manifests in the entrepreneurship context.
The role of networks in entrepreneurial learning
Studies on entrepreneurial learning have become increasingly popular in recent years
(Pittaway and Thorpe, 2012; Rae, 2006; Rae and Carswell, 2001; Wang and Chugh, 2014).
Literature highlights learning as an important element of the survival and growth of small
firms (Covin and Slevin, 1989; Gibb, 1997; Rae, 2005; Ravasi and Turati, 2005). Kolb
(1984) defines learning as a continuous process modified by experience. Bandura’s (1986)
theory of social cognition considers learning as an information-processing activity while
Mumford (1995) suggests that learning could be reactive, deliberate and responsive or
proactive based on the level of conscious intent. Learning can also be conceptualised as a
dynamic process that enables enacting entrepreneurial behaviours (Kirzner, 1973). Young
and Sexton (1997) find that entrepreneurial learning is defined by the role of memory, while
Deakins and Freel (1998) argue that experience generates new meaning, a change in thinking
and behaviour. In some cases, learning is about solving problems and overcoming obstacles
(Cope and Watts, 2000; Deakins and Freel, 1998; Franco and Haase, 2009). The role of
action learning, where much of learning is experientially based, has been particularly
highlighted (Rae and Carswell, 2001). It is generally postulated that entrepreneurs learn
primarily through learning-by-doing, encompassing trial and error activities, problem solving
and discovery (Cope and Watts, 2000; Deakins and Freel, 1998; Young and Sexton, 1997). In
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going through this process, entrepreneurs learn by responding to challenges while also
becoming aware of their limitations. Overall, literature seems to concur that learning is the
cognitive process of acquiring and structuring knowledge, creating meaning from experience
and generating new solutions from existing knowledge (Kempster and Cope, 2010; Rae and
Carswell, 2001).
While these studies help in understanding how entrepreneurs learn, the role of
networks in learning is still understudied. In response to calls for more studies on networks
and learning, Rae (2005) analyses contextual learning through participation in community,
industry and other networks whereby entrepreneurs experience learning. Taylor and Thorpe
(2004) apply social concepts to identify the effect of relationships on learning. Similarly, this
study considers that networks are a potential source of learning (e.g., Levitt and March, 1988;
Powell et al., 1996; Uzzi, 1997) that promotes efficient skill transfer among firms (Hamel,
1991) or produces a novel syntheses of existing information (Jack et al., 2010; Powell et al.,
1996). Depending on the variety of information available, entrepreneurs in some network
structures learn and make better decisions than entrepreneurs in other network structures. In
broader terms, this represents an important aspect of the complex, intimate and dynamic
relationships that exist between entrepreneurs and others they are connected to (Gibb, 1997).
While some studies focus on how entrepreneurs construct networks to solve problems (Jack
et al., 2010), little is known about the nature of ties and how learning is facilitated through the
creation of entrepreneurial networks.
This present study is grounded in social capital theory (Coleman, 1990; Putnam,
1995). There is wide consensus in literature that social capital is a valuable asset whose value
emerges from access gained to resources through an actor’s social relationships (Coleman,
1990; Granovetter, 1983; Jack, 2005; Liao and Welsch, 2005; Putnam, 1995). In explaining
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social capital, scholars use network characteristics such as strong and weak ties (Elfring and
Hulsink, 2003; Jack, 2005). Strong ties require fairly frequent contacts that are usually long-
term, reciprocal and involve a high degree of trust and emotional closeness (Granovetter,
1983; Marsden and Campbell, 1984). Scholars such as Hansen (1999) and Jack (2005)
sustain the importance of strong ties, arguing that this type of relationship benefits from the
transfer of complex information. While strong ties support learning, they may constrain the
search for new and novel information (Elfring and Hulsink, 2003). Entrepreneurs can gain
new perspectives and insights through communication and exchanging ideas with people they
do not meet very often, i.e., via weak ties. Weak ties can provide information and resources
beyond what is available in a close social circle (Elfring and Hulsink, 2003; Granovetter,
1983).
By bringing perspective from networks and entrepreneurial learning in the context of
knowledge-intensive start up, this study aims to understand the role played by networks in
facilitating the learning process.
Research method
Our approach in examining learning is based on several seminal works that conceptualise
learning as a process (Easterby-Smith et al., 1998; Mezirow, 1997). While some traditional
views on entrepreneurial learning perceive this as a continuous process (Hines and Thorpe,
1995), learning is increasingly considered as essentially non-linear and discontinuous (Cope
and Watts, 2000) whereby entrepreneurs learn from significant but critical events
(Appelbaum and Goransson, 1997; Cope, 2003; Deakins and Freel, 1998). In line with this
reasoning, Rae and Carswell (2001) find the existence of salient learning episodes where
entrepreneurs describe periods of learning that have been instrumental in forming their
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business approach. It has been suggested that during this process significant events stimulate
learning, such as experience crises, difficulties and barriers (Cope, 2003, 2005; Deakins and
Freel, 1998). Deakins and Freel (1998) support this approach arguing that learning is
triggered by significant and critical events. Chell et al. (1991) use critical incident analysis to
investigate the learning process in small firms.
Given the understanding that learning is the sense-making process of experiencing
and overcoming difficulties, the present study examines learning through a critical incident
analysis asking entrepreneurs to provide their life story experiences (Bruner, 2001). Of
particular interest is the narrative of experiencing difficult situations during the process of
starting a new business. In addition, this study also uses a network visualisation to build
better understanding of how entrepreneurs learn from networks. Network maps also help in
understanding the change in networks as a response to finding solutions (Soetanto and Jack,
2013). This combined method generates stories in the form of narrative and network mapping
activities for a specific episode in an entrepreneur’s life where learning took place.
Understanding learning from networks may be a challenge, but overcoming difficulties by
helping others can be a discursive process wherein people are able to envisage the link
between their own limitations and support from others (Shotter, 1993).
Data collection
The interviews were semi-structured with questions developed in advance and used to steer
the interviews. Each interview was taped, transcribed and verified by the respondents. During
the interviews, a timeline map was constructed to indicate significant life events and
experiences, which was subsequently used for respondents to reflect on the events more
deeply. Respondents thus structured their stories around significant events in which they
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recalled that changes in networks or learning had taken place. Focusing on the event by
asking respondents to disclose their experiences in detail and how they made sense of these
experiences led to the what, how and from whom they learned and what changes in thinking
and actions occurred. To address and specify the objective of understanding the process of
entrepreneurial learning through overcoming difficulties, and to consistently develop the
questions, a pyramidal algorithm of interview question development was employed
(Wengraf, 2001). During the story telling process, respondents were also asked to draw their
networks using a network mapping technique (Schiffer and Hauck, 2010). No instructions on
how to draw the network were provided. Respondents drew their connections with other
contacts and thereby created their ego-type networks. During the mapping activities, asking
several questions related to each network contact allowed capturing the reflection process.
The overall process lasted between 3 to 4 hours (including network visualisation).
Such approach entails some challenges. The first is reducing the potential bias of
memory loss. For this reason, the sample was limited to start-ups that were established less
than five years ago with the aim of creating homogeneity in the types of difficulties and help
respondents reflect on similar situations in starting a new venture. The second challenge
relates to respondents visualising their networks and focusing on the most important contacts.
Using a name generator technique (Burt, 2004), respondents created a list of contacts that
influenced the event in positive and negative ways, thereafter drawing two sets of networks,
those prior to (or at the time of) the event and those after the event.
Study sample
The data collection process was conducted in the period 2009 to 2010. The sample of this
study includes six entrepreneurs working in knowledge-intensive start-ups closely linked to
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university and commercialised technology-based ventures. These entrepreneurs were
academic spin-offs from Delft University of Technology (the Netherlands) and Lancaster
University (The United Kingdom). They relied heavily on support from business incubators.
In selecting the sample, several factors were considered including gender, type of industry
and the stage of venture development. This sample was thought to be sufficiently
representative to provide an excellent opportunity to examine entrepreneurial learning in the
context of knowledge-intensive start-ups. Table 1 provides a description of the entrepreneurs
participating in the study.
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Insert Table 1 about here
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Data analysis
To understand the learning process, the interview transcripts were independently read,
employing open in vivo coding using the NVIVO qualitative data analysis program. The
qualitative data was also iteratively analysed by moving back and forth between the data, the
network maps and the emergent structure of theoretical arguments responding to the research
questions (Locke, 2001). The analysis followed a three-step qualitative research method. In
the first step, a provisional category and first-order themes were created by identifying
statements via open coding (Locke, 2001) drawing on common statements, expressions and
opinions to form provisional categories and the first-order themes. A contact summary form
(Miles and Hubernman, 1994) was used to record the provisional categories emerging from
the data. In the second step, the first-order themes were integrated, creating the second-order
themes. This stage allowed an across-data comparison for greater abstract understanding. As
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the categories were consolidated, the coding moved from open to axial (Locke, 2001). In the
third step, the concept was limited by aggregating the theoretical dimensions into the third-
order themes. Several alternative models were then constructed describing how these themes
related to each other (Locke, 2001).
Differing in this present study is the use of network mapping as additional data not
only to enrich and triangulate the narrative data but also to help the respondents to focus on
their story. To analyse the changes in networks, a network template was constructed and used
as a sensitizing device to understand the changes in network characteristics. The template
included three objects representing the strength of ties (strong ties refer to high frequency
interactions while weak ties refer to low frequency interactions), the perceived importance of
the contact’s contribution and whether the contacts were new or old. Figure 1 illustrates the
network mapping template produced for the data collection process and the terminology used
in describing the entrepreneurs’ networks.
Figure 1. Template for network visualisation
New tie
(black circle)Old tie
(white circle)
Strong ties
(thick line)
Weak ties
(thin line)Strong contribution
(big circle)
Weak contribution
(small circle)
Entrepreneur
Strength of ties
Old or new ties
Network contribution
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Findings
Difficulties as a trigger for learning
The first research question focuses on the difficulties that influence learning. While literature
on entrepreneurship is populated with studies on the problems and obstacles that
entrepreneurs face, the intention of this study is to identify the types of difficulties that trigger
learning and how this affects the development of networks. Interestingly, the study finds that
entrepreneurs are often reluctant to use networks to deal with difficulties related to their
products or technologies. In contrast, their lack of entrepreneurial knowledge and skills forces
them to use networks for learning. The following discussion presents three categories of
difficulties that trigger entrepreneurs to seek help and learn from their networks.
Difficulties in dealing with self-crisis
In this study sample, evidence emerged that entrepreneurs experience self-crisis difficulties
during their entrepreneurial journey caused by the intrinsic nature and feelings about being
entrepreneurs. Entrepreneurs are often defined as high achievers and strongly motivated
(McClelland, 1965; 1987). However, in some cases, the entrepreneurial process can cause
frustration (Baron, 2008). To illustrate, the two selected cases below show how the
entrepreneurs confronted their beliefs that triggered their eagerness to learn how to build a
better and more sustained business.
The first case is Ben’s experience with his dissatisfaction of growth and achievement
(Case 1). Ben started the company with strong support from the university. The early revenue
came from a project commissioned by the university. As the company grew, Ben was able to
hire two additional part-timers. However, Ben felt a lack of achievement and uncertainty of
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the future as the company was not progressing further. Revenue was generated from sporadic
contracts that caused a problem in terms of expanding the company. Ben realised that the
business was not as he expected, ‘I feel that the business is more like a part-time and not full-
time business. I don’t know what will happen to my office next month or next year if I am
unable to get a client.’ The crisis that Ben experienced was triggered when two of his
employees left the company as they had not perceived his ambition to grow the business. This
experience affected him personally and his concept of being an entrepreneur, ‘When I started
my business, I may have been young and naïve. I did not realise that people depend on me.’
He had not thought seriously about the future and to succeed needed to learn how to build a
real and sustainable business.
The next case illustrates John’s difficulties in the transition from university life to
entrepreneurial life (Case 2). Compared to the other respondents, John’s background differed.
He worked as a senior researcher at a university for almost 15 years. Although he always
wanted to be independent and start his own business, he was afraid of making a decision until
2 years ago when he decided to commercialise his invention. John started his venture by
locating a business incubator. The biggest problem John faced was the change from
university employee to small business owner. He stated, ‘I would never think about being
alone before. In my previous life, there was always someone to help me solve problems. I had
my professors and colleagues. But now ... it’s different. I have no one, even my partner, she
tries to help me, but she just doesn’t understand.’ John acknowledged that he felt lonely and
found it difficult to adapt to his new life. He admitted that he had doubts and sometimes felt
regret about his decision but was committed to overcoming his limitations.
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Difficulties in dealing with management and organisation
The next category of difficulties that emerged relates to lack of entrepreneurial knowledge
and skills. Included in this category are obstacles related to management and organisation,
which may be the most documented challenges in entrepreneurship literature. Without
relevant knowledge and skills, entrepreneurs struggle to explore and exploit opportunities.
The next case illustrates the difficulties an entrepreneur faced due to lack of skills (Case 3).
Despite the firm’s young age, Mike’s company had enjoyed relatively fast and strong
growth. He started the business with his former doctoral supervisor who had a good
reputation in the field. In the second year, Mike’s business partner secured research funding
that helped the company buy expensive research equipment and hire several research
assistants. Due to his partner’s reputation, Mike was also able to secure some contracts with
big industrial companies. Mike explained his situation, ‘Our technology is unique, it's highly
complex and needs very specific knowledge. There are very few research groups in the world
that are working in the development of this technology.’ However, the crisis started when the
company grew and the need for managerial and organisational tasks increased. Over time, the
employees seemed to grow dissatisfied with his approach and management style. Mike held a
number of different roles in the organisation and tried to be involved in all business activities.
Unfortunately, he lacked managerial and business knowledge and was unable to establish an
efficient organisational structure and routines. His approach and the unclear job roles had
created confusion and inefficiency, which led to Mike having several heated confrontations
with his business partner and employees. This disagreement ended with his partner leaving
the business and challenging Mike’s perception of his abilities. Mike came to realise his
weaknesses and was committed to learning to improve. ‘My biggest problem was dealing
with management. I am a scientist working with my experiments. Labs are my world. I used
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to work in situations where everything was under control, and I like to be in control. But the
situation had challenged my belief .. and my confidence. I decided to learn more about
management, to be more business-minded and learn the human side.’
Difficulties in dealing with external threats
This last category of difficulties in dealing with external threats includes discrepancies with
other firms, changes in regulations, developing new technology, competition and so forth.
These changes can weaken the routines and concepts understood by entrepreneurs, leading to
increased uncertainty. This situation triggers learning when entrepreneurs cannot rely on their
previous experience or knowledge (Dess and Beard, 1984). As a result, entrepreneurs may
fail to accurately predict future scenario that may occur (Dickson and Weaver, 1997). The
two selected cases below illustrate the obstacles experienced by the entrepreneurs in the
study.
The particular situation described here occurred in the second year of Mark’s
company (Case 4). Mark had already won several business contracts from buyers in Italy,
Greece and Spain. Unfortunately, many of those companies experienced financial difficulties,
which had a huge impact on his business. During this difficult time, the production costs
increased three-fold over his initial predictions. The situation worsened as he had not
received payment and orders were even cancelled. As a result, Mark faced possible
bankruptcy, potentially ruining his dream. This crisis was self-imposed, as Mark
acknowledged that he made a very serious error and had been over-confident in his
estimations. Referring to the situation, he expressed his frustration, ‘It was a disaster. I didn’t
know what to do ... money ran out. On one occasion, I could not drive my car as I did not
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have money to buy fuel. I knew that I needed to find a solution and quickly. But, at that time,
there were too many mistakes and failures.’
The next case refers to Frank’s failure in dealing with regulations and obtaining
funding (Case 5). As the product in question resulted from his knowledge gained while
working with the university, he had to ask the university to release the intellectual property
rights. In addition to this problem, Frank failed to secure funding and investments. At the
same time, there were was a great deal of competition from existing products as well as
alternative products using different technologies. The crisis escalated, affecting his
confidence and starting to influence his personal life. Frank expressed this experience as the
darkest time in his life, ‘I sat for hours and hours every day in my office thinking about what
to do. Have I made a mistake? Of course I have … I failed the very basic thing, I failed to get
a loan. I barely knew any potential customers. I did not study the regulations. I was not
prepared for marketing and sales tasks. I just rushed into this business.’
The creation of networks for learning
This section aims to respond to the second and third research questions focusing on networks
and learning. Evident from the data is that networks are used to facilitate learning. Typical
statements from the interviews include, ‘I can’t solve my problem alone, I need help from
others’, ‘without him/her, my business won’t survive’, ‘I owe this guy, he taught me how to
deal with investors’ money’, ‘Being surrounded by other businesses has a positive impact on
me.’ More specifically, the network visualisation approach in this study helped respondents
identify their networks and the related changes in response to difficulties. Using the network
template, interesting findings emerged with regard to the network changes resulting from
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experiencing difficulties. The following section discusses the different types of network
strategies in facilitating learning.
Learning by strengthening networks
During the interviews and the network mapping activity, the entrepreneurs’ current networks
were found to offer abundant support but they needed to focus on several network contacts
offering greater resources in terms of learning. Considering several network maps, the
entrepreneurs were found to strengthen their network by reducing contacts and transforming
weak ties into strong ties. On several occasions, the entrepreneurs added a number of new ties
but this addition was not significant. The cases below illustrate the evidence of network
strengthening.
Mark (Case 4) started the company through the university’s incubator program. He
never felt lonely, as a sense of community had developed among start-up founders at the
incubators. In describing his network during his difficulties, Mark found himself in a quite
well-connected and supportive network. As shown in Figure 2, the initial network consisted
of several weak ties of overseas business partners and friends at incubators. The network
mapping shows that several of Mark’s networks had transformed from weak to strong ties
(several thick line emerged especially among overseas business partners). Mark strengthened
his networks as a response to external difficulties. He acknowledged that some of the new
strong ties, such as the incubator manager and several founders at the incubators, helped him
redefine his strategy, providing information and knowledge on funding and investments.
Mark described his learning experience as follows, ‘I know that I am capable of building
business, but I also confess that I was a bit ignorant and forgot to use my common sense. I
may have been forced by my ambition. I also forgot to listen, especially to people with
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experience. But after reflecting back to what happened to me ... I feel that I need to have
several trustable friends that I can share my problem with and learn from.’
Figure 2. Illustration of Mark’s network before and after experiencing difficulties
John (Case 2) developed a similar network strengthening approach. He experienced a
critical moment due to his difficulty in adapting to the new environment and life of an
entrepreneur. In starting the business, John felt lonely and isolated from others. However, he
started to build a strong relationship with other start-ups at the incubator. He expressed the
situation, ‘I felt lucky. They experience similar problems like me. We became close friends
and share our problems. We also learn from each other. I saw some of them even worked
together to apply for grants or project.’
Learning by expanding networks
Expanding networks by adding a significant number of new contacts and weak ties
constitutes another type of learning in the present study. The entrepreneurs expanded their
networks to foster new exploration and expertise from external networks.
Intial networks Network after crisis
Network strengthening
Size of network: decrease
Strong ties: increase
Network contribution: increase
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After his partner left the company, Mike (Case 3) decided to move to a new facility
and downsize his business. In the spirit of re-starting from the beginning and learning from
his mistakes, Mike decided to grow his network by including professionals such as
consultants and lawyers. In addition, Mike joined a business networking group and diligently
meet other business owners. Most of the help came from owners of other small businesses
located in same premises (business incubator). Explaining his new networks, ‘I realise that I
need to listen and learn from them. They came here earlier than me, experience the same
problems, face the same obstacles. So I benefited from being here.’ To illustrate the transition
of Mike’s network, Figure 3 shows the difference between the initial network and the
network after experiencing difficulties. In the initial network, Mike was surrounded by
mainly university contacts. He relied heavily on his business partners to deal with external
tasks. In contrast, the network after the crisis shows a considerable number of new contacts.
Figure 3. Illustration of Mike’ network before and after experiencing difficulties
Intial networksNetwork after crisis
Network expanding
Size of network: increase
Strong ties: slightly increase
Network contribution: increase
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Learning by condensing networks
In this type of learning, the networks were condensed by significantly reducing the number of
contacts and focusing on a few but strong and trustworthy ties. The example below illustrates
the learning process through reducing the number of contacts.
On experiencing obstacles, Frank (Case 5) found support from his family and close
friends. The conversations were not always related to business but helped build his
confidence. The main support and source of learning actually came from his father. Frank’s
father is a farmer and runs a butcher’s shop. ‘He didn’t teach me anything … but everything
became clear to me after my business collapsed. I’ve been observing him since I was a kid. I
know how hard he works, his persistence and his willingness to sacrifice for the business. It
took me a while to reflect on my experience and learn from my father. The process surprised
me.’ Frank learnt that being persistent and having a vision is important for the business. He
also learnt about strategy, routines and decision-making. After several months, Frank was
ready to start again. In his new business, he planned to develop an interactive mobile app
serving the supply chain network of the farming industry. Looking at the change in his
networks, a huge decline in the number of contacts is evident. Although Frank started
building a new network, the main source of learning was from family and close friends.
Figure 4. Illustration of John’s network before and after experiencing difficulties
Intial networks Network after crisis
Network diminishing
Size of network: decrease
Strong ties: increase
Network contribution: decrease
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Learning by creating new networks
The last type of network development is learning through creating new networks. The
entrepreneurs rebuilt their network by introducing many new contacts and replacing existent
ones. Such a significant change of network arises when the current network is no longer
relevant to the new challenge. The following case provides evidence of entrepreneurs
creating new networks.
To solve the difficulties in dealing with slow growth, Ben (Case 1) created a new
partnership, thereby introducing him to a new network. He also transformed the business by
approaching the international market through opening a new training centre and using new
software. As a result, Ben came across a number of opportunities and applications for his
product in several different industries. Ben described the moment as a turning point and
vision for the business, ‘It was seminal. That was the first time in my life that I really realised
the potential of my skill, my expertise and my dream. However, there was also a big risk in
taking this step. But to see that I could expand my business was so fascinating.’ Ben’s case
shows that the network changed radically to changes in his business approach. Figure 5
illustrates Ben’s network after the crisis with many new and stronger ties.
Figure 5. Illustration of Ben’s network after experiencing difficulties
Intial networks Network after crisis
Network churning
Size of network: increase
Strong ties: slightly increase
Network contribution: increase
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Learning in networks
To understand the process of learning in networks, the interviews began by asking about the
contribution of each contact in the respondent’s network. Further questions were asked to
collect more details and refine the data on type of interactions and how respondents used their
networks to question their own understanding and solve their difficulties. This process
created a narrative of how the respondents interacted, reflected and built new understanding
or knowledge from their networks.
Respondents used the relationship with their contacts as a catalyst for learning, which
later produced evidence of critical reflection. One of the entrepreneurs stated, ‘I don’t feel
that I am alone. Having them in the same building was super fun. I acquired so much
knowledge just by observing them .. even got something from their success or failure’ (Piet).
Evidence of learning can also be seen from a statement referring to the role of the incubator
manager, ‘She always challenges me .. not about right or wrong, but it makes me think
weather I make a wise decision. We had many discussions, most of the time I disagreed with
her. But again, she proved that she has a different perspective in seeing things and she is
right’ (Mike). Acknowledging that he was wrong on several occasions triggered this learning
process. From the interviews, several incidences emerged where critical reflection resulted
from interactions with the network. As an example, ‘I used to believe that being an
entrepreneur, you have your own freedom .. to do anything that you want. In fact, it’s quite
the opposite. I still need to follow the rules, norms and culture of the business. These people
help me understand my business, evaluate my objectives and make me think about the real
meaning of it’ (Ben).
The study found that as a result of learning, the entrepreneurs made a change in
strategy. John learnt the skill of approaching and persuading customers, ‘I have learnt a lot
22
from my new contacts, I have learnt how to deal with the fast changing business of my clients.
I changed my approach, I listen to them and then adapt to the situation. I am now trying to fit
in and absorb the changes’ (John). Another example is ‘I have been taught to calculate risk
and used many parameters before making decision. But in this business, I should consider
many things, including my feeling. ... managing risk is a skill that I can learn but also like art
that I need to appreciate... Risk is a part of business’ (Frank). In many cases, the learning
experience was engendered by the pressure of difficulties that encouraged the entrepreneurs
to adjust their growth ambition. In evidence of this change, ‘The discussion we had gave me a
huge motivation to keep on working’ (Mike). Increases in self-confidence and self-efficacy
were also witnessed, ‘This guy changed me. I felt that I was confident enough before starting
my business, but knowing him .. and getting support from him was a big boost in my belief’
(John).
Overall, the study shows that learning in networks can be explained by the presence
of critical reflection and changes in strategy. Through critical reflection, learning can
fundamentally change an individual’s concept, theory and actions, thereby creating entirely
new strategies. As Mezirow (1990) states, critical reflection is not concerned with the how or
the how-to action but with the why, the reasons for consequences of what people do. For
instance, in the case of Mike when confronted by his employee, not undertaking critical
reflection could have led to him sacking the employee. Instead, Mike acknowledged that the
major conflict could not be easily resolved and accepted his limitations. Further evidence of
critical reflection is Piet’s experience. As he thought he had failed, Piet’s self-belief was
destroyed but he was able to build new confidence with his family’s support. Both situations
experienced by Mike and Piet indicate the presence of critical reflection as part of learning.
23
The network learning model
In developing networks for learning, this study investigates the network characteristics that
facilitate learning, focusing on the role of strong and weak ties as well as old and new
contacts. In learning through strengthening networks, the entrepreneurs strengthened their ties
by meeting more frequently. At the same time, trust was developed and facilitated the
transformation of more refined knowledge and information. As Table 2 shows, the strength of
ties is relatively high and the presence of old ties is significantly higher than new ties.
Evidence was also found that the entrepreneurs benefited from strong ties. In terms of
learning by condensing networks, similar findings emerged when the number of strong ties
dominated the process of learning from networks. These ties tend to include family, friends
and colleagues who help entrepreneurs during their difficult time.
------------------------------
Insert Table 2 about here
------------------------------
Moreover, a contrasting finding is that for learning by expanding and creating new
networks, the strength of ties is relatively low. The evidence indicates that entrepreneurs
expand their network by adding a significant number of new ties. Although the number of
weak ties increased, the entrepreneurs maintained their relationships with old ties. The last
network pattern is dominated by weak ties. However, the number of old ties decreased
significantly while the number of new ties increased. Overall, this finding shows that both
strong and weak ties play a significant role in supporting learning.
This section discusses the relationship between strength of ties and the types of
difficulties experienced by the entrepreneurs. Entrepreneurs seek additional information in an
attempt to reduce or manage their difficulties. New partners in their network offer an
24
important source of new knowledge and information. New partners broaden the scope of their
abilities, increasing the likelihood of obtaining new information and adding to the diversity of
information to which they are exposed. Considering entrepreneurial networks as a knowledge
base to be tapped, entrepreneurs expand this knowledge base by forming new relationships
with new partners. This is an exploration response, focused on gathering new information
from new network contacts.
Literature on networks also suggests that new partners are likely to represent
relatively weak ties. Weak ties are beneficial as they are conduits to new, unique information
which are important in knowledge exploration (Granovetter, 1983). Thus, entrepreneurs are
likely to seek out such ties when experiencing difficulties, as this resource may be useful in
addressing issues that the firm has been unable to effectively resolve with existing resources.
Typical difficulties that entrepreneurs face and that weak tie can help resolve are their unique
capabilities but also the limitation of such capabilities. Entrepreneurs may face personal
difficulties arising from their lack of knowledge, skills and experience. Management and
organisation difficulties may create the need for a unique resource deriving from new and
relatively weak ties. Obstacles may also relate to technical and production issues caused by
the firm’s current situation. Firm-related obstacles are unique and specific. To solve problems
and learn in this context, the empirical findings show that entrepreneurs diversified their
networks in their effort to explore alternatives for solution. By utilizing weak ties,
entrepreneurs gathered new information or resources that aided them during the learning
process. Weak ties increase the likelihood of solving personal and firm difficulties by adding
diversity of knowledge. Novel information from weak ties may be useful in addressing those
difficulties that entrepreneurs were unable to address before. Thus, the study proposes:
25
Proposition 1. Networks dominated by weak ties are effective in facilitating explorative
learning elicited by difficulties in dealing with management, organisation and entrepreneurs’
self-crisis.
Entrepreneurs cannot control external difficulties. Difficulties in this category refer to
changes in market competition, technology development, new regulations or other
environmental factors. Changing demand and customer preferences can also become a source
of external difficulties. Entrepreneurs may also find it difficult to control personal difficulties,
as uncertainty, loneliness and long-term pressure cannot be eliminated entirely. These
personal difficulties have emotional implications and may also influence motivation and self-
belief. Under this condition, entrepreneurs are likely to respond by exploiting, strengthening
and focusing on their current and strong ties in the effort to exploit existing capabilities.
Podolny (1994) argues that interacting with past and current contacts is the best strategy
when uncertainty is high and assessing the quality of new contacts is difficult. In this case,
entrepreneurs may learn effectively through contacts sharing similar ideals and values (Burt,
2004; Deakins and Freel, 1998). For instance, entrepreneurs experiencing market difficulties
will seek stability and trust in relationships, which is more likely to occur in existing partner
relationships than in new (uncertain) relationships (Hansen, 1999). It is commonly accepted
that when the source of obstacles is unknown, individuals will tend to form relationships with
others who share similar ideas and values. This banding-together of similar and familiar
others may represent the common human behaviour of striving for homogeneity (Hogg and
Terr, 2000). The present study finds that the entrepreneurs reinforced their existing ties,
maintaining their current ties but with greater commitment. When faced with external
obstacles, entrepreneurs seek stability and trust in their network, which is more likely to
26
occur in existing than in new relationships (Hansen, 1999). Relationships with strong ties,
such as family, friends and colleagues, help entrepreneurs by providing a means of
exchanging tacit knowledge, trust and comfort and facilitate exploitative learning experience.
For this reason, this study proposes:
Proposition 2. Networks dominated by strong ties are effective in facilitating exploitative
learning elicited by difficulties in dealing with external threats and entrepreneurs’ self-crisis.
Conclusions
Although theory on entrepreneurial learning is still under-developed, there is growing interest
in entrepreneurs learning in difficult times in the small business context (Cope, 2005).
Entrepreneurs are commonly portrayed as those with the ability to singlehandedly organise
resources to explore and exploit opportunities (Brockhaus, 1980, Cooper, 1973; Delmar and
Davidsson, 2000; Ireland and Webb, 2007; McClelland, 1965, 1987). Indeed, in starting a
new business, most entrepreneurs face difficulties and challenges (Brüderl and Schussler,
1990; Ireland and Webb, 2007). Although nascent entrepreneurs know they will encounter
difficulties, they sometimes underestimate the impact of situations entailing pressure and
feeling distant from resolving the issues (Brüderl and Preisendörfer, 1998; Downing, 2005;
Franco and Haase, 2009).
Based on Bandura’s (1986) social cognitive theory, this study sees the process of
solving difficulties as a learning process in a social context where people learn from each
others. The interaction between entrepreneurs and their social environment creates a
reciprocal process including cognition, behaviour, environmental influences and personal
factors (Bandura, 1986). By interacting with others, entrepreneurs draw on their
27
consciousness as they deal with difficulties, and this consciousness can gradually change as
they receive information or knowledge from their networks. The present study finds that the
context, such as interactions with the network, plays a significant role in learning. The case
studies illustrate that the entrepreneurs’ experiences with their networks affect the learning
process. This study shows that learning through networks can also produce a higher-order
learning or transformative learning, as Mezirow (1990, 1997) suggests.
Synthesis of the study findings
To summarize, the study confirms previous findings (e.g., Cope and Watts, 2000;
Deakins and Freel, 1998; Sullivan, 2000) that learning can result from critical events such as
experiencing difficulties. This study proposed a model of entrepreneurial learning through
networks (figure 6). Four network learning models that entrepreneurs develop to facilitate
learning are presented here. In these case studies, the entrepreneurs responded to difficulties
by strengthening, expanding, condensing and creating new networks for learning. Examining
the network characteristics, evidence emerged that entrepreneurs tended to rely on their
exploitative learning using strong ties in dealing with difficulties caused by external threats.
External threats led the entrepreneurs closer to their close and trusted contacts, such as long-
term business partners, family and friends. In contrast, in responding to internal crises, such
as difficulties in dealing with management and organisation, the entrepreneurs adapted their
networks by inviting new ties and developing weak ties for explorative learning. These ties
offered greater resources and capabilities allowing the entrepreneurs to learn new skills or
acquire new knowledge. In solving personal difficulties, such as a self-identity crisis,
experiencing loneliness and dealing with uncertainty, the findings show a rather mixed
pattern where entrepreneurs used both strong and weak ties as sources of learning. It would
28
seem that the combination of family, friends and new contacts helped entrepreneurs deal with
their difficulties.
Figure 6. Networks and entrepreneurial learning
Difficulties in dealing
with entrepreneurs’ self-
crisis
Difficulties in dealing
with management and
organisation
Learning by
condensing
networks
Learning by
creating new
networks
Learning by
strengthening
networks
Learning by
expanding
networks
Critical reflection
and change in
strategy
Exploitative
learning through
network
dominated with
Strong ties
Explorative
learning through
network
dominated with
Weak ties
Difficulties in dealing
with external threats
The factors that trigger
learning
The pattern of network change for
learning
Implication for theory and practice
This study makes a number of important empirically-grounded contributions. First,
prior research has established the role of critical events, such as experiencing difficulties, as
triggers for learning (Cope, 2003). This concept is here extended by considering the support
entrepreneurs received from their networks. A significant contribution is in examining the
process of how interactions are used to facilitate learning and finding solutions to problems.
Second, previous studies have focused on the learning process as a personal reflective process
(Cope, 2003), yet scant empirical evidence exists on how learning can be associated with
networks (Cope, 2003). This study addresses this gap in literature by analysing the networks
that entrepreneurs use to solve their difficulties. More importantly, this study expands on the
position of networks in entrepreneurial learning literature by identifying four potential
29
network learning scenarios. Lastly, the study offers a new approach to studying networks and
learning. The innovative method of combining critical incidence analysis and network
visualisation provides rich yet refined data that enables studying the interactions between
entrepreneurs and their networks.
The implications of this research for practices can be manifested in the form of
networking support for entrepreneurs. One practical recommendation is to encourage those
responsible for mentoring entrepreneurs to strengthen and equip entrepreneurs with
networking capability. Support programmes commonly offered by business incubators can be
tailored to identify networks contacts that can be beneficial for entrepreneurs. The
implementation of ICT in strengthening entrepreneurial networks and their managerial skills
could also be considered (Secundo and Passiante, 2007). Another recommendation is to
encourage entrepreneurs to use network-mapping technique as a tool to help them build
strategic entrepreneurial networks.
Limitations and future research
This study has several limitations that also represent a future research avenue. The
findings could to be tested on bigger samples to enable generalising the results to other
contexts such as less knowledge-intensive sectors. In addition, the authors encourage the
construction of new samples that include additional variables and themes such as gender,
team and type of industry, as well as testing the approach (visualisation and network mapping
activity) in different entrepreneurship contexts.
30
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Table 1. Description of the entrepreneurs in this study
Entrepreneur Description Age Type of
industry
Ben
Ben had recently graduated from university when
he started the business. Together with a friend, he
set up a small office in a business development
centre offering a consultancy service using their
expertise on mathematical modelling methods.
Revenue was generated from several consultancy
projects commissioned by the university, industry
and government.
25 Construction
and
mechanical
engineering
John
Before starting the venture, John worked in a
research institute for 15 years. He had extensive
research experience in sound technology. The
decision to start a business derived from closing his
research unit. John’s first project was developing a
hearing protection system.
41 Manufacturing
Mike
Mike is the owner of a small biotechnology
company that specialised in developing a novel
enzyme technology. After 6 years of research at the
university, Mike decided to establish a start-up.
29 Biotechnology
Piet
After receiving a PhD in mechanical engineering,
Piet had worked for several years a postdoctoral
researcher. He started a company to develop a new
method to increase vehicle efficiency by combining
his knowledge of mechanical engineering and
design technology.
30 Mechanical
engineering
Mark
Mark was studying at university to become an
industrial designer when he developed several ideas
on innovative decoration products. He started the
company with two friends. His first product was
designed and built using access to the university
workshop and support from academics.
23 Design
product
Frank
Frank worked as researcher and lecturer at the
university when he developed software for disabled
people using new speech recognition technology.
He was also involved in several European projects
to disseminate his technology. As a result, Frank
wrote a business plan and received funding to build
a prototype.
32 Information
technology
38
Table 2. Change of networks as learning
Supporting
cases from 6
entrepreneurs
Strength
of ties
Mean/SD
Old ties
Mean/SD
New ties
Mean/SD
Perceived contribution
- Excerpt from the interview
Learning
by
strengtheni
ng
networks
4 supporting
cases
4.23
(2.67)
4.95
(3.01)
0.81
(0.32)
‘I used to meet him every
month, but after the crisis, I
talked with him more often.
He helped me to stay in
business’ (John)
Learning
by
condensing
networks
5 supporting
cases
3.25
(1.99)
2.48
(1.53)
0.98
(0.57)
'Learning from him meant
that I needed to be with
him. He taught me new
skills, it was painful but
worth it’ (Frank)
Learning
by
expanding
networks
5 supporting
cases
1.53
(0.72)
2.72
(1.34)
2.87
(1.47)
‘This guy was important.
None of my employees knew
how to solve the problem.
We needed someone with a
different set of knowledge of
hybrid engine control
systems’ (Mike)
Learning
by creating
new
networks
4 supporting
cases
2.40
(1.05)
1.23
(0.89)
4.35
(2.51)
‘These new friends helped
me adapt to a new situation
and challenges in the
business. Their perception
and approach to business
are different to mine’ (Ben)
Notes: For each network contact, information on the strength of ties was collected. The
variable was measured with a Likert-scale from 1 to 5 indicating how close the relationship is
between the respondents and their contacts. Their responses were also validated by asking a
question on the frequency of face-to-face interactions.